Rajiv Jain, Brian Kersmanc & Surdarshan Murthy

00:00:11:20 - 00:00:15:15 AT&T is a telecommunications company in the United States. 00:00:15:15 - 00:00:21:01 It's part of a three player market at this point in time, with Verizon and T-Mobile. 00:00:21:01 - 00:00:25:15 They're the third largest in terms of the number of subscribers that they have on their network. 00:00:25:15 - 00:00:28:06 They provide wireless and broadband services. 00:00:28:06 - 00:00:31:05 What's interesting about this is it’s a utility-like asset. 00:00:31:05 - 00:00:35:21 So you go and you pay your telephone bill and you’re subscribed to your broadband access 00:00:35:21 - 00:00:38:16 and it becomes a very sticky product over the course of time. 00:00:38:16 - 00:00:41:02 It's very cash generative of over the course of time as well. 00:00:41:02 - 00:00:46:01 Telecommunications services are a very basic need and utility and in the modern world. 00:00:46:01 - 00:00:48:24 This facilitates what we do on a day to day basis 00:00:48:24 - 00:00:51:17 communicating, for work, for personal use. 00:00:51:17 - 00:00:55:07 It gives us valuable data on the go when we're trying to research 00:00:55:07 - 00:00:57:24 where we're going out to eat or how we get somewhere, 00:00:57:24 - 00:01:00:24 how we need to pull maps up on our cell phones and things like that. 00:01:00:24 - 00:01:06:08 So it's a viable underpinning of today's modern infrastructure and the modern world. 00:01:06:08 - 00:01:10:20 For AT&T the addressable market is kind of split into two categories. 00:01:10:20 - 00:01:16:07 Number one is the wireless side of the business, where there's about 600 million wireless subscribers in the US. 00:01:16:07 - 00:01:22:07 That's split between three providers T-Mobile and Verizon are the other two. 00:01:22:07 - 00:01:25:21 AT&T and these other two are trying to vie for share and 00:01:25:21 - 00:01:28:06 jockeying for that share and that share shift over the course of time. 00:01:28:06 - 00:01:32:12 But largely it's a slow, steady, growing market overall. 00:01:32:12 - 00:01:36:10 The more interesting aspect is on the broadband side of the business 00:01:36:10 - 00:01:40:01 where AT&T is trying to address close to 90 million subscribers 00:01:40:01 - 00:01:41:06 on that side of the business 00:01:41:06 - 00:01:46:17 and they're taking share away from the classic wireline duopolies 00:01:46:17 - 00:01:50:13 that are in place right now with their fibre that they've been laying out over the past several years. 00:01:50:13 - 00:01:52:21 AT&T is an interesting investment here 00:01:52:21 - 00:01:56:05 because it's been relatively unloved over the past several years. 00:01:56:05 - 00:02:02:10 All of the telcos within the US and globally have gone through this massive 5G capex ramping cycle. 00:02:02:10 - 00:02:06:08 Over the course of time, they spent a lot of money to hang up new radios, new equipment 00:02:06:08 - 00:02:11:10 to spend on spectrum and things like that to really get themselves up to speed for 5G. 00:02:11:10 - 00:02:13:23 Unfortunately, the market has not necessarily paid 00:02:13:23 - 00:02:17:20 for the 5G upgrades and investments that they've done over the course of time 00:02:17:20 - 00:02:21:07 and in fact the telcos have really competed with each other on price 00:02:21:07 - 00:02:24:19 and really hurt each other in terms of that pricing dynamic. 00:02:24:19 - 00:02:27:11 So what's interesting now is though that spending is largely 00:02:27:11 - 00:02:30:15 over for the capex cycle for 5G. 00:02:30:15 - 00:02:33:20 So the cash flows will naturally improve because you don't have that spending. 00:02:33:20 - 00:02:35:13 It's all done and behind you 00:02:35:13 - 00:02:40:22 and the other interesting aspect of what we're seeing right now is all three telcos in the US are actually raising prices. 00:02:40:22 - 00:02:44:21 A lot of that cash drops down to the bottom line, because it's a fixed asset 00:02:44:21 - 00:02:48:08 that you're raising that cash against on the other side. 00:02:48:08 - 00:02:51:21 The other incremental opportunity that's very interesting for AT&T 00:02:51:21 - 00:02:55:05 is that they're aggressively going into the broadband side of the business as well 00:02:55:05 - 00:03:00:03 where there's been a lazy duopoly on the wireline side of the business for a very long time 00:03:00:03 - 00:03:04:09 and AT&T has been aggressively laying down fibre optic cable which is an equivalent, 00:03:04:09 - 00:03:08:16 if not better solution than what's out there and aggressively taking share from these two other carriers.